Thursday, 30 August 2012

When Brendan Rodgers gave his first press conference as Liverpool manager, it was faultless. His respect for the traditions of the club, his honesty about his “short career” and his infectious drive and determination bought him the good will of even the most sceptical fans. He summed it up like this:

“For me, what I want to do is prove my worth and prove my honesty and commitment to Liverpool Football Club. History judges you as a manager, that's the reality of it. So it won't be now, it will be history – and I hope history will allow me to walk alongside some of the great managers here.”

Rodgers is a great talker, but history will judge him on his actions rather than his words. There have been lots of positives since he joined but there are already some niggling concerns which are explored in detail below.

Transfer Talk

Rodgers has been too honest with the media when it comes to transfers and, in some press conferences, he has shown a small club mentality. He needs to learn quickly that at Liverpool every sentence a manager utters is magnified and this can lead to seemingly innocuous comments being blown out of all proportion. He also needs to learn that at Liverpool we do our business behind closed doors, not through the media.

When asked about whether Daniel Agger could be sold, Rodgers responded by saying “Every player has a price.” This was a schoolboy error which led to a spate of “Agger up for Sale” headlines. Rodgers had fed the vultures and, in doing so, risked unsettling his best defender.

When asked about Andy Carroll’s potential move to Newcastle he almost said the right thing, “I would need to be a nutcase to even consider at this moment to let Carroll go out.” He then let his true feelings clear by saying “unless there are other solutions.” It is hard to imagine Rodgers saying he would let Gerrard leave if he could find another solution, and the media interpreted his comments to mean “Carroll is surplus to requirements.”

If Carroll or the fans were in any doubt about where he stands with Rodgers, it was put to bed with these extraordinary comments: “I am talking generically here, I'm not sure we are in a position to have £35m players as third-choice strikers.” How that statement is generic is anybody’s guess, and it was yet another example of a man who is far too honest when it comes to discussing his players with the media.

He is not much better when it comes to the players coming in. When asked about Liverpool’s interest in Dempsey, he said "Ian Ayre has spoken with the club to see what the position is. That is where we're at. He's a very talented player but we don't like to talk about other clubs' players." His comments led to an official complaint by Fulham to the Premier League and unsettled Dempsey to such an extent that he has not played for Fulham since. The final part of his statement “we don’t like to talk about other clubs players” was all he needed to say.

It will be very interesting to see how Rodgers handles the media when the pressure is really on. His tendency to be too honest with them could turn into a noose around his neck.

Lucas Injury

Lucas is out for three months with an injury that may not have been so severe had Rodgers and the medical team got a crucial decision right. After such a long layoff with a serious knee injury, Lucas needed to be wrapped in cotton wool. This did not happen and he was allowed to start the game against Manchester City despite carrying a thigh injury. In the post match interview Rodgers said, “in the warm-up Lucas felt his thigh muscle when he took a shot." As soon as he knew there was a problem, Rodgers had an opportunity to say "I'm not risking him." He did not take it.

We will never know how long Lucas would have been out for had he been withdrawn prior to the match, but there is no doubt that the decision to play him was ill advised, even bordering on reckless. This is not directly Rodgers fault, but when it comes to team selection the buck stops with the manager.

Where is Plan B?

Swansea City were electric at the beginning of last season. Their brand of attacking football was a breath of fresh air and, importantly, it was delivering results. However, there was always a question mark about whether they had a “Plan B”. As one Swansea fan put it, “don't expect a Plan B because Rodgers believes in Plan A so much. It can be frustrating at times ... when you're a goal down with 89 minutes on the clock you don't want to see your back four stroking it about in leisurely fashion!” Liverpool fans who watched the WBA game will relate to this. It was very frustrating to watch us outnumbered and getting outplayed, yet seemingly unwilling to try something different. The decision to bring on Joe Cole instead of Andy Carroll with twenty minutes to go summed this up. Even two goals down with ten men, Rodgers stuck to his philosophy.

The biggest risk with this philosophy is that teams will bully us into defeat. It happened to Swansea against Stoke and Everton last season and it could well happen to Liverpool this term. With a team like Barcelona you do not need a Plan B because they execute Plan A so effectively, but there is a big question mark over whether a similar philosophy will bring similar success at Anfield. Ultimately, the success or failure of Brendan Rodgers as Liverpool manager will be dependent on how well Plan A is executed, because there is no Plan B.

I have highlighted these concerns in the hope that they are teething problems rather than the tips of some very big icebergs. I will come back to this article at the end of the season to see how he has progressed with his handling of the media, his ability to get big decisions right and, most importantly, the success or failure of his football philosophy.

To put some factual evidence
behind his argument, Henry posted the following chart showing the revenue per
seat for various clubs:

Henry cherry picks Arsenal
and Chelsea from the above list to show that their revenue per seat far
outweighs Liverpool’s. He then points to the fact that they are situated in
affluent London to back up his point. What he does not explain is why
Manchester United, situated in Salford which has a similar macro economy to
Liverpool, are able to generate £500 more per seat than Liverpool.

Let’s analyse the two clubs
to see where this extra revenue comes from. Liverpool’s season tickets range
from £725 to £802, whilst United’s range from £532 to £950. United have a
bigger scale because they have more seats, but the average for both clubs is
around £750. This backs up the point that the macro economics are comparable.

So, how do United generate
£500 more per seat per year than LFC? The answer is that Manchester United’s
corporate and premium seating far outweighs Liverpool’s, and it is the
corporate customers who drive up the revenue per head. No matter how successful
Liverpool are on the pitch, we will never be able to match United for spend per
head in the existing Anfield due to its infrastructure.

When you take into account
the fact that United also have 30,000 more seats than Liverpool, it is clear to
see that staying at Anfield will lead to United’s spending power outgrowing
Liverpool’s exponentially in the coming years. Success for Liverpool on the
pitch will not help this aspect of our finances much, and it is a myth that
global commercial income can bridge the gap. The truth is that the biggest gap
between the revenues of the two clubs comes from match days and if we do not
act it will continue to grow.

Henry’s argument is this:
“If Anfield yielded £1550 per seat, without adding seats, LFC match-day revenue
would rise from £41M to £71M.” What he fails to mention is that the current
Anfield has no room for more corporate facilities. He also fails to mention
that United’s increased spend per seat comes not from Joe Public paying more,
but from corporate guests paying more. We have the fan base to match United on
this front, but we do not have the infrastructure. That is why the new stadium
is absolutely critical to our medium and long term success.

When Henry suggests that our
future success on the pitch and through our global commercial revenue will lead to a new stadium, he is trying to get us
to buy into the notion that he can get the cart to pull the horse. It won’t.
His strategy will lead to us standing still, or moving backwards.

There is one potential chink of light at the end of the tunnel: "Redevelop Anfield". We have recently learnt that the previously impossible task of demolishing 1800 homes behind the main stand, and offering the residents a payment for these homes so low that they cannot afford to buy elsewhere, is back on the cards. It will be interesting to see what has changed since John Henry said in 2011 that redevelopment posed "so many obstacles."Ian Ayre now speaks of "great dialogue" with the residents, a comment that bemused and angered the Salisbury residents committee (who have met Ayre just once) in equal measure. Salisbury have said "everybody can see which way this is going now." What they mean is that compulsory purchase orders will be sought and a massive fight will follow, one that could well end up with the European Commission and drag on for years. If you are wondering about timescales, a similar process started in the Edge Lane area of the city in 2001, it went to the High Court in 2006 and the European Court in 2009. The legal dispute was finally resolved in 2010, and the project is still a work in progress.

The brutal truth is this: Without
a new or redeveloped stadium, Liverpool have no hope of being able to compete
with Chelsea, City, Arsenal or United financially no matter how well the team performs. Mr Henry needs to act on the stadium plans, and act now.

Saturday, 28 April 2012

Liverpool FC need to evolve in order to progress. Stating the obvious, for this to happen we need revenue. Without the Champions League or a new stadium, revenues are hard to come by, so new innovative streams of income need to be found.

It is really important that, as we search for new revenue streams, we stay true to who we are. We must never deviate from the blueprint for success that Bill Shankly set out for the club, an ethos that can be summed up in three very simple statements:

We play “pass and move” attacking football. Our fans always get value for money from the team.

The only important people are the fans. Everything the club does is for them.

We do our business behind closed doors. We do not wash our dirty laundry in public.

These things together will bring success, and success will make the people happy. That, in a nutshell, is The Liverpool Way.

To the credit of Fenway Sports Group, they have taken the time to understand these guiding principles and the critical importance of them. When asked last year about the Kenny Dalglish contract negotiations, Henry responded “What is going on in that regard is private. It is something called The Liverpool Way.”

This brings us on to the recent announcement that Liverpool will be the subject of a fly on the wall documentary by Fox. The documentary will give viewers a close look into the inner workings of our club. What will this mean for the blueprint for success fed down to us from Shankly?

Firstly, we will get to see the pass and move philosophy being bred into players at all levels of the club. The documentary will offer us a unique insight into how we are applying our traditions and ethos to the modern day game. It could offer fans who have doubts about the direction Dalglish is taking the club some reassurance that we are on the right track. Do we really need a documentary to show us this though? Surely the judgement on whether or not we are playing the right brand of football comes from our performances on the pitch.

Secondly, it is opening the gates of Anfield and Melwood to the fans. If the fans are the most important people, why shouldn’t they be allowed to see what goes on inside the club at every level? Fenway Sports Group must have great confidence that the cameras will capture the club in a way that enhances our image around the world and increases our global fan base. We are the only English club to grant our fans this much access. That’s got to be a good thing, right? Well, not necessarily. In opening the doors to our fans, we are also opening it to our fiercest rivals.

The third element is the most concerning one. By its very nature, a fly on the wall documentary has to be dramatic. Every drama must have highs and lows, and it is how the low points are edited that will be most important.

Having watched the HBO 247 series, there are two key elements that make this type of documentary a success. The first thing they do really well is offer an intimate portrait of the players and staff. Cameras follow them into their homes to give a truly unique insight into their personal lives. They show “hotel hang time” and the banter between the players. Anybody who has seen LFC TV’s Melwood Soccer Skills show will see that we probably have nothing to worry about on this front. The banter is healthy at Melwood. Our team spirit is strong.

The second element of the show is all about the cameras getting up close and personal with the team during the highs and the lows. In HBO's 247: The Road To The Winter Classic series it is the locker room rant by New York Ranger’s coach John Tortorella that is arguably the best part of the whole series. It is this sort of drama that the producers will be looking for from Liverpool FC. Is that really something we want the world to see?

The recent disclosures by the club, that Fox will not film during the FA Cup Final and that the club has full editorial control, are reassuring for fans but may well cause Fox an issue. If they let Kenny Dalglish loose in the cutting room they may have a very short series indeed.

It seems inevitable that there will have to be some drama. Without some fireworks, it will be a ratings flop and that defeats the object. They will find it incredibly difficult to get the balance right. How can they paint an intimate portrait of the club without showing us washing our dirty laundry in public?

We now must wait to see how Fox's editors, guided by FSG, portray one of English sport's greatest institutions. If this series is done well, it will market the club in America in a positive fashion. If it is done badly, it will make us a laughing stock.

Sunday, 22 April 2012

The 2012 Deloittes Money League was recently published, and there were some interesting numbers for Liverpool fans.

We continued to slide down the Money League table, falling behind Inter Milan into 9th place (our 2009 high point was 7th).

Here is Deloittes 5 year view of our total revenues:

What is really interesting is how the revenue model is changing. Here is how things look in a snap shot:

As you can see, we have lost significant revenues from TV and Match Day due to the lack of Champions League football. However, we have made up some of these losses due to the strong sponsorship deal signed with Standard Chartered.

When we participated in The Champions League, "Broadcasting" accounted for 43% of our total revenue. Last year, it dropped to 36%. Before we signed the deal with Standard Chartered, "Commercial" made up just 34% of out total revenue. It now represents 42%.

What these numbers show is just how good a job Ian Ayre did as Commercial Director, bringing in the revenue to enable us to compete in the transfer market with clubs enjoying the financial benefits of Champions League football. The numbers also show us just how crucial it is that we get back into that competition for the 2013/14 season.

Next year's accounts will show a further shift towards "Commercial" as the key driver of revenue. "Broadcasting" and "Match Day" revenues will fall further due to non-participation in the Europa League whilst our commercial revenue will grow thanks to the new kit deal with Warrior. It is looking highly likely that "Commercial" will soon account for 50% of our total club revenue.

There are only two ways we can buck this trend: 1) Get a new stadium 2) Get back into the Champions League. The big risk is that the longer we go without both of these revenue drivers the harder it will be for us to strike such lucrative sponsorship deals.

The 2012/13 season will be a crucial one for Liverpool's future, both on and off the pitch.